Contract Law Fundamentals Flashcards

What is an 'exclusion clause'?

Answer: A contractual term that seeks to exclude or limit one party's liability

An exclusion (or exemption) clause seeks to exclude or limit a party's liability for breach of contract or negligence. Its validity is subject to the Unfair Contract Terms Act 1977 and the Consumer Rights Act 2015.

What test did the House of Lords apply in Photo Production v Securicor [1980] for exclusion clauses?

Answer: Construction: does the clause on its true construction cover the breach that has occurred?

In Photo Production v Securicor, the House of Lords held that in commercial contracts between parties of equal bargaining power, exclusion clauses should be construed according to their natural meaning, without a hostile approach.

Which Act controls unfair terms in consumer contracts?

Answer: The Consumer Rights Act 2015

The Consumer Rights Act 2015 governs unfair terms in consumer contracts, replacing the Unfair Terms in Consumer Contracts Regulations 1999. A term is unfair if it causes a significant imbalance in the parties' rights.

What is 'frustration' of a contract?

Answer: A supervening event, not caused by either party, makes performance radically different from what was agreed

Frustration occurs when an unforeseen supervening event, beyond the control of either party, makes performance of the contract impossible or radically different from what was agreed (Davis Contractors v Fareham UDC [1956]).

What are the consequences of frustration under the Law Reform (Frustrated Contracts) Act 1943?

Answer: Money paid before frustration is recoverable; expenses incurred can be retained at the court's discretion

Under the 1943 Act, money paid before the frustrating event is recoverable, and the court may allow a party to retain money to cover expenses incurred. Valuable benefits received before frustration must also be paid for.

What is the remedy of 'specific performance'?

Answer: A court order requiring a party to perform their contractual obligations

Specific performance is an equitable remedy where the court orders a party to carry out their contractual obligations. It is available at the court's discretion, typically where damages would be inadequate (e.g., sale of unique goods or land).